NMDC Steel hits 5% upper circuit on market debut

Shares of NMDC Steel, the demerged steel business of National Mineral Development Corporation (NMDC), made a strong debut on the domestic bourses on Monday, with the stock hitting 5% upper circuit limit of ₹31.75 on the BSE. The share of the privatisation-bound company was listed at ₹30.25 on both the exchanges – BSE and NSE.

NMDC Steel (NSL) shares closed 4.96% higher at ₹31.75, with a combination of more than 91 lakh shares changing hands on the BSE and the NSE. During the session, the stock hit an intraday low of ₹29.05 on the BSE and ₹30.25 on the NSE. At the end of day’s trade, the market capitalisation stood at ₹9,304.67 crore. In comparison, NSL’s parent NMDC shares shed 1.77% to settle at ₹119 apiece, while the BSE benchmark Sensex ended 311 points lower at 60,691 levels.

NSL was formed after the demerger of the steel manufacturing facility of India's largest iron ore producer NMDC in Nagarnar, Chhattisgarh. Under the demerger, shareholders of NMDC got one equity share of NMDC Steel for every share held, while assets of ₹18,650 crore and liabilities of ₹1,602 crore were also demerged to NMDC Steel.

In October 2020, the Cabinet Committee on Economic Affairs (CCEA) had given its “in-principle” approval to the demerger of the steel plant from state-owned miner NMDC, and the strategic disinvestment of the steel unit by selling the “entire stake” of the Centre “to a strategic buyer”.

In July last year, NMDC’s board had approved a scheme of arrangement between the company, NMDC Steel, and their respective creditors and shareholders, which entailed inter-alia demerger of Nagarnar Iron & Steel Plant (NISP). In October 2022, NMDC shares turned ex-demerger, with eligible shareholders (as on 25 October, 2022) receiving one share of NMDC Steel bearing a face value of ₹10 each, for every share held in NMDC of face value of ₹1 each.

The central government, which holds a 60.79% stake in NSL, is setting up a 3 MTPA capacity greenfield Integrated Steel Plant based on Hi-Smelt technology in Nagarnar, located 16 km from Jagdalpur in Chhattisgarh state with an estimated outlay of ₹25,500 crore.

NSL is up for privatisation as the government is looking to sell its majority stake in the company and along with management control. In December last year, the government invited preliminary bids or expressions of interest (EoI) for the strategic sale and the last date for putting in bids was January 27.

As per the latest report, the government has received multiple preliminary bids for the privatisation of NSL. ArcelorMittal, the world’s largest steel company, Tata Steel, Jindal Steel and Power, Adani Group, and Sajjan Jindal’s JSW Steel are reportedly in the race to buy the government’s majority stake in NMDC Steel.